Hockey says poor gaffe was misreported

Finance Minister Mathias Cormann has moved to reset the budget debate, calling for a fiscal "reality check" about the state of the nation's economy and warning of a serious corrective action in future to protect Australians' living standards.

In an address to the Sydney Institute that builds on Treasurer Joe Hockey's warning of "emergency" action and a Queensland-style austerity budget if structural reforms such as the $7 GP fee, higher education and welfare changes are not passed, Senator Cormann said the budget debate should not be a "spectator sport" and that "this is no game".

Mathias Cormann speaks at the Sydney Institute. Photo: Wolter Peeters

The Finance Minister pushed back against media "noise" about the budget timetable, pointing out that crucial appropriation bills had passed, as had a $7.6 billion, four-year cut to foreign aid and the tax levy on high-income earners.

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He said suggestions the budget was unfair were "nonsense" – despite Treasury numbers released to Fairfax Media showing the budget cuts were inequitable – declaring "what is unfair is to promise what you cannot deliver".

The tough talk comes before Parliament resumes next week and after Mr Hockey, his staff and Treasury officials have criss-crossed the country for a series of budget-related meetings with the Senate crossbench.

"A number of the measures that are the subject of the most intensive post-budget debate are not due to take effect for some time," Senator Cormann said. "So there is still ample time to keep engaging with the Senate crossbenchers.

"No government in recent political history had passed all of its budget measures through both houses of Parliament by the end of August."

The federal government has so far failed to secure support for a number of budget measures that will cut spending and raise revenue and the Palmer United Party has, so far, signalled its unwillingness to compromise on many of those measures.

But Senator Cormann pointed out the GP fee was not due to start until July 1, 2015 and higher education deregulation until 2016.

He vowed the Abbott government was "committed to the marathon" that was passing the budget.

Treasurer Joe Hockey, who has kept a low profile since apologising for an embarrassing gaffe that "the poorest people either don't have cars or actually don't drive very far in many cases" while arguing the $2.2 billion fuel excise measure was progressive, re-emerged on Tuesday to argue his comments had been misinterpreted and to press the case for his budget.

"Australia cannot continue to borrow $1 billion a month – 70 per cent of it heading overseas as repayment of the interest," he said. "We have always said that we've prepared to negotiate with sensible people ... these reforms that still need to be delivered as part of the budget are the ones that are going to set us up for the future."

Against a backdrop of below-trend economic growth, rising unemployment, low consumer confidence and plateauing business investment, Senator Cormann warned that Australia was in a much weaker fiscal position than in 2007.

"We are more exposed and less resilient as a nation today than we could be, should be and can be again to deal with any global economic challenges which may come our way in the years ahead," he said.

Labor was in "complete denial" about the state of the nation's finances, Senator Cormann said, but when the Coalition returned to power federal spending as a proportion of gross domestic product had risen from 23.1 per cent to 25.9 per cent and would hit 26.5 per cent in a decade.

That trajectory, combined with falling tax revenues, translated into a growing fiscal gap and mounting public debt.

The challenge for Labor was to explain if they were still committed to a budget surplus and, if so, how they would achieve it.

To date, the Palmer United Party has indicated it will oppose the GP co-payment, rise in fuel excise, education reforms and increase to the Pharmaceutical Benefits Scheme co-payment.

Labor was scathing of the government’s shift in rhetoric on Wednesday, describing it as “incoherent, illogical and inconsistent”.

Shadow treasurer Chris Bowen said Mr Hockey’s language about a budget emergency was now no longer even in sync with the case being put by his Finance Minister.

Mr Bowen added that while senior ministers Julie Bishop, Peter Dutton and Christopher Pyne had suggested the need for compromise in their portfolios, Mr Hockey had failed to produce a “coherent” strategy of his own.

“He’s been in hiding for much of the week, he came out of hiding yesterday to put his foot in his mouth again by claiming his words were twisted on the matter of the impact of petrol tax on low income people,” Mr Bowen said.

“The Treasurer just can’t get a straight story.

“He can’t get a straight story for the Parliament or for the people.

“No wonder people have lost confidence in this Treasurer, including his own backbench, in this Treasurer’s ability to prosecute a fiscal strategy.”

379 comments

Matty, all you have to do is tax the people with the money, not the ones without. Trust me, it's really simple if you sit down with a pen and paper and a calculator. (I don't think Joe can use a calculator, Tony certainly can't, so it's up to you).

Commenter

Tin

Date and time

August 20, 2014, 6:58AM

Interested to read that Australia has to borrow from overseas. The interest rates overseas are zero in some countries, so where is the interest rate problem. When the interest rate gets to high for the USA, they print their own money. Who says we can't do the same ?

Commenter

Rod

Location

the Coast

Date and time

August 20, 2014, 7:54AM

When you keep crying 'wolf' and the majority now realise that there ain't no wolf....then surely that is the definition of stupidity..........doing the same thing but expecting a different result. We have all awoken from your con Cormann.....give it up now and just go away.

Commenter

JT

Date and time

August 20, 2014, 7:55AM

Conman and Smokin' Joe should get out in the real world, not the hallowed halls of the Sydney Institute or the 2GB studios. That's why they've got themselves into this state of delusion about the economy, they've closetted themselves with their fellow travellers and have no idea of the effect of their dud budget on the real people out there.

Commenter

DaveB

Date and time

August 20, 2014, 8:00AM

I love that he took the soft option and delivered this rubbish to the converted at the Sydney Institute. I bet Gerard was frothing in delight last night. If Cormann and his boss want to get this budget through then get out to the town halls and convince the people of its merit instead of hiding behind the Sydney Institute, Limited News and 2GB. The truth is they know it's a bag of crap and they will be shot down in flames as soon as they open their mouths.

Commenter

eyeroll

Location

Sydney

Date and time

August 20, 2014, 8:01AM

Just when you thought this government could not sink any lower, Mathias takes the stand. The proposition that budget is inequitable, according to Corman is “ nonsense”, despite treasury figures to the contrary. What sort of people do we have running the country? Corman knows better than treasury, well if that’s the case there’s a whole government department we can rid ourselves of. We can just leave it up to Methias.If the budget is so equitable why for the first time since their introduction, were the tables that outline the impact (of the budget) on different groups absent from it?This man talks about a billion dollar a month interest bill of which 70% goes offshore. How about the corporate welfare provided to all those OS based companies. How about all of the tax many don’t pay, like the googles and Apples. How about the mining tax the removal of which will benefit OS multinationals.How is denying a 25YR the unemployment benefit for six months not unfair? Whilst at the same time allowing someone with a million a year earnings on there super a concessional tax rate of 15%Mr. Corman, we are not stupid, the thinking voters are onto your game. You might get a rousing reception from the Sydney Institute but the Salvo’s annual conference will boo you off the stage. Finance policy driven by right wing ideology as opposed to sound economic principles is a recipe for a divided nation, that does not bode well for our future and I am hoping that at the next election the rest of Australia feels the same way.

Commenter

KIDDING

Date and time

August 20, 2014, 8:01AM

Matthias Cormann thinks we need a "fiscal reality check". How about a "social reality check" on the part of the Abbott Government. Not one of them has yet explained how unemployed under thirties are expected to survive on nothing. And they have slashed the funding available to charities, ensuring that they will be incapable of feeding the hundreds of thousands of Australians the government have condemned to destitution.

Commenter

Anne

Date and time

August 20, 2014, 8:04AM

The never ending LNP scare campaign. Apparently it is OK for middle and low income earners to borrow money on their credit cards and mortgages to compensate for the unfair budget measures, low wages and the cost of living but if the government has an overdraft it is an emergency situation and the working class need to be taught a lesson. And Mat the $7 GP co-payment is about social engineering and stopping people going to the doctor, both you and Joe said that it is not intended to pay off the overdraft.

Commenter

Dreyfus

Location

Grafton

Date and time

August 20, 2014, 8:11AM

Why do I get the impression that many members of this cabinet were prefects at private schools who fell in love with their own power and privilege and now think it's a right?

Commenter

fred

Date and time

August 20, 2014, 8:13AM

Where's Joe, is he having another holiday?Mathias you say that the Budget is not unfair. You still don't get it do you? You won't swallow your pride and admit that you, Joe and your Big Business mates have designed a Budget flop that unfairly attacks average Australia.What you all have done for the sake of your Liberal Party ideology is wreck any chance for a united attack on the Budget deficit. You have completely failed to govern for all of Australia for the sake of your greed and arrogance and as a result you have lost the support of the people. All your whinging about the opposition parties not passing your rubbish Budget has been unfounded because they are only representing their electorate's wishes. You have brought this debacle on yourselves by your stupidy and no amount of spin will change it!The only thing you can do now for a united Australia is to sit down with Joe and design a new FAIR BUDGET for ALL Australians - something you should have done in the first place!

19 Aug
Treasurer Joe Hockey has suggested his claim that the "poorest people either don't have cars or actually don't drive very far" was misreported by the media, re-opening debate about the embarrassing gaffe.

21 Aug
The federal government has been taken to task by key crossbench senators for a confused budget sales job, as Prime Minister Tony Abbott signalled a compromise deal on the $7 GP co-payment could be in the offing to ease the burden on pensioners.